在函数内使用配置变量

In the code given below, I am trying to modify it in such a way that the db connection variables are used from a config file. This should make the password more secure as I can restrict the config file's permissions.

Kindly let me know if there is a way by which I can modify the code to get the db variables from another file/config file?

class ActivitycodesCollection {
    var $list, $err, $sql;    
    // --- Private variables for database access
    var $_db_host = "######";
    var $_db_username = "######";
    var $_db_passwd = "######";
    var $_db_name = "######";
    function query ($where="") {
        mysql_pconnect ($this->_db_host, $this->_db_username, $this->_db_passwd);
        mysql_select_db ($this->_db_name);
        $where = "WHERE " . $where;
        $sql = "SELECT * FROM activitycodes $where";
        $result = mysql_query ($sql);
        $this->err = mysql_error();
        $this->sql = $sql;
        if (mysql_num_rows($result) > 0) {
            while (list($id) = mysql_fetch_array ($result)) {
                $this->list[$id] = new activitycodes($id);
            }
        }
    }
}

I tried including the config.ini file in this class/function but it threw an error like

unexpected T_VARIABLE, expecting T_FUNCTION

Your code is hopelessly outdated.
1) Don't use var for properties, use private or protected.
2) Don't use mysql_* functions, use PDO.
3) Don't keep connection details inside the class. Just require PDO connection in constructor.
4) Don't trust any data outside your scope - don't allow just write some untrusted text into your SQL query (you do it by $where variable).
5) Read books. "PHP Objects, Patterns, and Practice" will help you now, and "Clean code" - little bit later.

Example:

class ActivitycodesCollection
{
    private $list;
    private $PDO;
    private $table_name;

    public function __construct(\PDO $PDO, $table_name)
    {
        $this->PDO        = $PDO;
        $this->table_name = $table_name;
    }

    public function fetchByParameter($parameter)
    {
        $query = $this->PDO->prepare("SELECT `id` FROM `{$this->table_name}` WHERE "
                ." some_field = :parameter");
        if (!$query)
        {
            return false;
        }
        if (!($query->execute(array(':parameter'=> $parameter))))
        {
            return false;
        }

        $results = $query->fetchAll(\PDO::FETCH_ASSOC);
        if (!empty($result))
        {
            foreach ($results as $result)
            {
                $id              = $result['id'];
                $this->list[$id] = new ActivityCodes($id);
            }
        }
    }
}

You can use parse_ini_file in you constructor.

class ActivitycodesCollection {
    var $list, $err, $sql;    

    const CONFIG_FILE = 'config.ini';

    // --- Private variables for database access
    var $_db_host = ''
    var $_db_username = '';
    var $_db_passwd = '';
    var $_db_name = '';

    public function ActivitycodesCollection() {
        $config = parse_ini_file(self::CONFIG_FILE);
        $this->_db_host = $config['db']['host'];
        //etc
    }

    public function query ($where="") {
        mysql_pconnect ($this->_db_host, $this->_db_username, $this->_db_passwd);
        mysql_select_db ($this->_db_name);
        $where = "WHERE " . $where;
        $sql = "SELECT * FROM activitycodes $where";
        $result = mysql_query ($sql);
        $this->err = mysql_error();
        $this->sql = $sql;
        if (mysql_num_rows($result) > 0) {
            while (list($id) = mysql_fetch_array ($result)) {
                $this->list[$id] = new activitycodes($id);
            }
        }
    }

And the ini file should be something like that :

[db]
host = localhost
name = foo
user = bar
pass = baz

Putting the SQL connection data in a separate files does not increase security at all. Actually, storing them in a file that does not have a .php extension makes it less secure since it might be accessible by a user while the code of a PHP file is not visible to any users. You also cannot use more restrictive permissions on the config file than on your PHP files since whatever user PHP is running as (usually the webserver user) needs to access them.

Simply store the connection data in a PHP file:

<?php
define('DB_HOST', '...');
define('DB_NAME', '...');
define('DB_USER', '...');
define('DB_PASS', '...');

Then include this file (outside your class definition) and use the constants when making the connection.

Without seeing the "config" file it's not possible to say how to write a parser for it. A simple solution would be to write some php code which sets the variables - but if you include / require it, the variables will be set in global scope - not within the method. But you could eval(file_get_contents($config_file_path)) - which would set the variables in local scope at the risk of providing a method for code injection.

BTW there are a large number of issues with the code you have provided. Leaving aside the potential risk of SQL injection, if the method parameter is null / blank, then the query will be malformed (consider function query ($where="1"). Relying on specific column ordering is bad practice.

It's also hard to imagine how yo restrict access to this config file when the only practical means would be via suphp or base opendir.